1. Field of the Invention
The present invention generally relates to e-commerce and more particularly to a novel system and process for allocating commissions, based upon an equally novel system and process of establishing a network of local distributors to promote sales of services and merchandise over the Internet (or any other electronic, broad based audio-visual communication medium).
2. Description of the Related Art
Commerce on the Internet (e-commerce) and traditional product-to-market programs (including the brick-and-mortar sectors and the various forms of the conventional direct marketing sectorxe2x80x94e.g., direct mail, party hosting, telemarketing, and multi-level marketing) are increasingly viewed as competitive modes of bringing product to the consumer. While each system has its advantages, they represent alternative distribution channels, but e-commerce is still in its infancy.
The present invention solves a problem that begins with what makes the Internet so attractivexe2x80x94the potential of cheap, instant customer access. The tradeoff for this is the loss of local contact, based on the infinite nature of the World Wide Webxe2x80x94a virtual market place with no geography.
The basic problem is how to divide an otherwise indivisible Internet into defined geographic areas for such useful purposes as maintaining customer contact, promoting product sales, and paying commissions. The invention opens a pathway for Web-based businesses to maintain personal contact with their customers and facilitate other useful purposes.
Conventional retail outlets, referred to as xe2x80x9cbrick-and-mortarxe2x80x9d stores function through real estate, location, and staff to get the consumer through the door in order to xe2x80x9cmake the sale.xe2x80x9d This adds an expensive layer to marketing. The same is true for other brick-and-mortar sectors, including the service sector and the business-to-business sector.
The promise of a good e-commerce Web site is to instantly reach a larger customer base than any known business method without the brick-and-mortar expenses. Any person with a computer and access to the Internet can reach around the world, making the Internet both a threat and an attraction to any multi-market brick-and-mortar operator. Stated simply, disk space is cheaper than real estate.
Another major problem the invention solves relates to market area. A retail store, an office or a warehouse is established to service a given (i.e., limited) geographical area. The concept of market area, sales area, or service area is not new; however, the geographical service area for e-commerce is worldwide, thus the term World Wide Web. By design, the World Wide Web is without beginning or end; it is a universal market that, by design, cannot be divided into geographical parts. This has created problems with such things as restricting gambling or sales of controlled products.
Over the centuries, commerce has evolved from caravans and ships traveling to remote areas and selling their goods at makeshift bazaars to today""s central distribution systemsxe2x80x94brick-and-mortar structures. Where the local demographics support the expense, the xe2x80x9clocal merchantxe2x80x9d has become a Wal-Mart, the xe2x80x9clocal grocerxe2x80x9d has become a Kroger store, and the xe2x80x9clocal hardwarexe2x80x9d has become a Home Depot. In other words, the economies of scale have become available only to areas where the expense can be justified. The Internet and the invention help to solve this dilemma.
In its simplest form, e-commerce allows a consumer to push a button and buy direct. In theory, the economies of scale and overhead savings are passed to the customer. Location and geography are not part of the equation. Access to the Internet and the ability to deliver what is ordered are the only requirements. The only sacrifices are personal contact and a local presence. These are not minor issues, but they are problems addressed by the invention.
The idea of going direct to the market is not a new concept. Direct marketing, such as infomercials, multi-level marketing (including telemarketing), and the Fuller Brush Salesman (now, the Avon Lady or the Amway distributor), has existed for years. Their methods do not readily translate to the Internet.
The conflict over how to embrace both the current distribution system (in whatever form is used) and the new system presents a conundrum. Attempted solutions, such as access portals and links, tend to complicate and compound the differences.
Manufacturers want to sell where the customer is; however, the Internet means the customer is everywherexe2x80x94and the supplier can be anywhere. The result is that the concepts of market and of competition are being re-defined. It (the Internet) is a place of business without borders that defies the conventions of marketing methods that have evolved from personal contact.
Massive advertising budgets geared to name recognition are an answer, but some current studies suggest that less than 1.5% of the visitors to a site buy something. This creates a cost-per-visitor problem solved by the invention.
Amazon.com represents to have the largest retail customer base on the Internet, but it has yet to post a profit. This illustrates the fact that shepherding customers to a Web site, within the economies of e-commerce""s promise, is the key to the Internet""s future.
The problem of how to get customers to e-commerce sites is balanced by the opposing problem of how to get customers through the door (i.e., away from the Internet). The three examples below, suggest the inability of the current systems to deal with both the opportunities and risks of e-commerce.
The first example is a brick-and-mortar retailer. Faced with the threat imposed by e-commerce, one national hardware chain apparently determined that keeping product off the Internet would keep customers from buying there. The hardware chain sent letters to all of its suppliers informing them that the store might be hesitant to do business with suppliers that become competitors by selling to the same customers over the Internet. This type of reaction imposes a choice of alternative markets to manufacturers and suppliers, combined with the threat of losing a major avenue to market.
A second example is direct marketing. Again, faced with the growth of the Internet""s potential, one company that supports the xe2x80x9cpartyxe2x80x9d distribution system chose to add a clause to its contracts with distributors and independent sales representatives prohibiting them from offering product over the Internet.
The problem is that this form of direct marketing relies on saturating an area with an independent sales forcexe2x80x94a concept of friend selling friend. Going to the Internet threatens those independent sellers and their market, which translates into losing sales people. As an answer to this problem, one company is attempting to keep everyone off the Internet and stay with the old ways.
A third example of the inherent conflicts of systems is the attempt to blend the two worlds. For the brick-and-mortar retailer, the example of this resolution is what has become known as click-and-mortar. A retailer uses one system to create the image for the other. The problem is that the Internet prices need to be the same as the in-store prices or customers feel cheated.
For the direct marketer, an example has been to offer special pages for sales people to offer their customers. Here the customer enters the company""s site through a privatized page and the sales person is credited with any sales. Some of the problems of such a system are tracking the sales and getting people to enter through a special page rather than the company""s main page.
One need only consider the typical program for introducing a new product to understand the full difference in marketing systems. A test market is generally established before products are considered for general release. The known demographics of that test market are essential to the results. It is impossible to partition the Internet for a market study. The market is the world and the test group can only be limited to those who log-on.
The invention, described below, overcomes these complications with a hardware/software solution that controls record keeping to properly and reliably allocate sales commissions. It does this without depending upon complex customer originated sales information and without detracting from the established brick-and-mortar local sales structure. More to the point, it creates a system for effectively defining market areas over the otherwise market without boundaries, regions, or territoriesxe2x80x94the Internet.
The present invention solves the problem of how to divide an otherwise indivisible Internet into defined geographic areas for useful purposes such as promoting product sales and paying commissions. The invention comprises a computer system and method of allocating commissions for sales made over the Internet and includes processes for: defining exclusive geographic distribution/representation areas with respect to the World Wide Web, the Internet, and e-commerce; selling exclusive geographic distribution/representation areas; recording sales of goods delivered to the exclusive geographic distribution/representation areas placed through an Internet web site; determining a value of the goods delivered to each of the geographic distribution/representation areas, and allocating the commissions based solely on the value of the goods delivered to each of the geographic distribution/representation areas.
The exclusive geographic distribution/representation areas are sold for one of a plurality of Web partner programs. Many separate Web partner programs may exist in each of the geographic distribution/representation areas. Each of the Web partner programs is associated with a distinct product line and only one entity can own a particular Web partner distribution right within a given exclusive geographic sales area. These exclusive geographic distribution/representation areas are referred to as defined, exclusive areas (DEAs).
The present invention maintains records of the sales for the plurality of Web partner programs through a single centralized system. The invention uses the funds generated by the selling to operate the Web partner programs. In addition, the invention verifies a sale through digital recording of an oral agreement.